The president said this would put an end to the "war on coal" and "job-killing regulations".
The Energy Independence Executive Order suspends more than half a dozen measures enacted by his predecessor, and boosts fossil fuels.
Business groups have praised the Trump administration's move but environmental campaigners have condemned it.
Flanked by coal miners as he signed the order, the president said: "My administration is putting an end to the war on coal.
"With today's executive action I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion and to cancel job-killing regulations."
During the campaign, he vowed to pull the US out of the Paris climate deal agreed in December 2015.
What is Mr Trump's order changing?
President Trump takes a very different approach to the environment from Mr Obama. The former president argued that climate change was "real and cannot be ignored".
Among the initiatives now rescinded is the Clean Power Plan, which required states to slash carbon emissions, to meet US commitments under the Paris accord.
Mr Trump says that the US will no longer wage war on coal
The regulation has been unpopular in Republican-run states, where it has been subject to legal challenges - especially from businesses that rely on burning oil, coal and gas.
Last year the Supreme Court temporarily halted the plan, while the challenges are heard.
The Trump administration says that scrapping the plan will put people to work and reduce America's reliance on imported fuel.
It says the president will be "moving forward on energy production in the US".
"The previous administration devalued workers with their policies. We can protect the environment while providing people with work."
During the president's maiden visit to the Environmental Protection Agency, he signed the Energy Independence Executive Order, which cuts EPA regulations in order to support Mr Trump's plan of cutting the agency's budget by a third.
He recently appointed climate change sceptic Scott Pruitt as its new head.
What will the impact be?
This order signed by President Trump is both a practical and a philosophical attempt to change the US narrative on climate change.
His supporters say it will create thousands of jobs in the liberated oil and gas industries. His opponents agree the new order will be a job creator - but they'll be jobs for lawyers, not in the coal fields.
Front and centre is practical action on the Clean Power Plan (CPP), the Obama project to cut fossil fuels from energy production. Although it has long been tied up in the courts, the new administration will leave it to fester there while they come up with a much weaker replacement.
There will also be new, less restrictive rules on methane emissions from the oil and industry and more freedom to sell coal leases from federal lands.
President Trump is signalling a significant change in the widely held philosophy that CO2 is the enemy, the main driver of climate change.
US environmentalists are aghast but also enraged. They will be queuing up to go to court. But in many ways that's playing into the hands of President Trump and the fossil fuel lobby.
"Delay is what they want," one green source told me, "delay is winning."
Will the US honour its commitments under the Paris climate deal?
While campaigning for the presidency, Mr Trump argued that the agreement was unfair to the US.
The landmark agreement commits governments to moving their economies away from fossil fuels and reducing carbon emissions to try to contain global temperature rise.
Mr Trump has in the past said climate change had been "created by and for the Chinese".
Reducing emissions from coal-fired power plants was a key part of America's commitment in the Paris climate deal
But at the end of last year, he acknowledged that there was "some connectivity" between human activity and climate change.
It is now unclear where exactly the US stands in relation to the deal.
Whatever the US chooses, the EU, India and China say they will stick to their pledges made in Paris.
What has been the reaction?
The president's order will be resisted by environmentalists, who have promised to challenge it in the courts.
Campaigning groups are scathing of the president's environment policies
"These actions are an assault on American values and they endanger the health, safety and prosperity of every American," billionaire environmental activist Tom Steyer was quoted by Reuters as saying.
"I think it is a climate destruction plan in place of a climate action plan," the Natural Resources Defense Council's David Doniger told the BBC, adding that they will fight the president in court.
Another green group, Earthjustice, said it would challenge the measure in and out of court.
"This order ignores the law and scientific reality," its President Trip Van Noppen said.